Hind Dorr plans qualified institutional placement of Rs250 crore

Hindustan Dorr-Oliver (HDO), the listed subsidiary of IVRCL Infrastructure and Projects, is planning to raise about Rs 225-250 crore through a qualified institutional placement.

The issue is slated to hit the market in the next 3 to 6 months.
“An enabling provision for raising Rs 225-250 crore has already been approved. Now we are working on a plan to enhance manufacturing capacity,” E Sudhir Reddy, HDO’s vice-chairman, told DNA.

The money would be used for expanding manufacturing capabilities through setting up of greenfield projects and acquisitions.

HDO is an engineering company focusing on mineral benefication, water treatment plants, process equipment/ solutions and other critical technologies including liquid-solid separation.

It currently has facilities in Gujarat. “We will invest about Rs 20-25 crore to expand this. But manufacturing is something that is being worked out seriously,” Reddy said.

For fiscal 2009, the company had about Rs 513 crore in revenues and Rs 30.6 crore in net profit.

Manufacturing currently contributes to just 8-10% of revenues.
HDO currently has an orderbook of about Rs 1,200 crore and participated in tenders for another Rs 1,000 crore.

“For further expansion, we also need some growth capital. The company’s current networth is about Rs 200 crore. The QIP will also help in getting additional capital in addition to funding the manufacturing plans,” Reddy explained.

Amit Mahawar, analyst with MF Global, said HDO’s strategy of an increased focus on acquiring manufacturing capabilities in various verticals augurs well for the aggressive promoter group.

“It can further leverage upon its balance sheet to tap larger-value projects with an increased scope of in-house manufacturing,” Mahawar said in a note last week.

Analysts said the company is expected to post a turnover of Rs 800 crore and Ebitda margin of about 12% for last fiscal.

Reddy refused to divulge. “I can’t put a number but I think we will be on a par with other players in the sector like Engineers India Ltd or Thermax in terms of profitability,” Reddy said.

With the manufacturing plans getting finalised, the company expects that in three years, about 30-40% of revenues will flow in from manufacturing.